decentralized exchange
decentralized exchange
The core function of a decentralized exchange is to allow users to freely trade between cryptocurrencies. So this way, the existence of a third party facilitating the transaction is eliminated, and one user directly interacts with another user to complete the transaction. The current decentralized exchanges are mainly implemented in the automatic market maker mode. In this mode, users can trade with a direct fund pool, which greatly improves the transaction depth and experience.
The main purpose of launching a decentralized exchange is to allow users to store and transfer funds independently without any restrictions from external parties.
Another advantage of decentralized exchanges is that funds are controlled by users. In a centralized exchange, users need to deposit funds in the exchange account, and the exchange acts as a custodian, and users cannot really control the funds in their exchange accounts.
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Who controls decentralized exchanges?
Cross-chain
Cross-chain
Cross-chain interaction is clearly intended to support communication between two separate blockchains of different cryptocurrencies.
In order to test the feasibility of these interactions in the real world of digital asset transactions, the Lightning Network team explored exchanging Litecoin (LTC) for Bitcoin (BTC) and verifying that both assets (LTC and BTC) were successfully completed. trade.
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Features and functions of cross-chain technology
Communicate across blockchains
In order for cross-blockchain interactions to work, there must be a tool to facilitate communication between the two blockchains. Taking Polkadot as an example, Polkadot is designed as a fully scalable and scalable blockchain development, deployment and interactive testing platform. There are three core components to achieve cross-chain interaction: relay chain, parachain and cross-chain transfer bridge .
Cross-Blockchain Compatibility
The essence of cross-blockchain compatibility comes down to the connection of distributed ledgers that bring together an ecosystem of tokens and DApps and users. This will phase out instances of silos operating in blockchain and bring about a future where interoperability is a new frontier.
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Emerging players in the field
polkadot
The protocol allows other blockchains to share information in a trustless environment. The overall infrastructure will maintain three core components: relay chains, parachains, and cross-chain transfer bridges.
Polkadot has attracted much attention. As the Polkadot parachain card slot auction approaches, the liquidity problems caused by staking KSM or DOT are bound to become prominent.
According to the progress of Polkadot's official parallel chain, Zenlink will launch a 1.0 test version for community participation. It plans to give priority to cooperation with Polkadot's DeFi platform Acala and Staking liquidity solution providers Bifrost and Stafi, so that users can complete related DEX transactions on Zenlink. While enjoying the Staking income brought by the card slot auction, you can also obtain the corresponding KSM or DOT liquidity.
According to Debank, the top three DEXs are Uniswap V2, 0x, and Tokenlon.
Uniswap V2
Uniswap V2 is an upgraded version of Uniswap V1. In the previous version, Uniswap V1 only allowed users to create an exchange pool between ERC-20 Token and ETH. This has been improved in Uniswap V2. Users can add any tokens in Uniswap V2 exchange pool. For example, now users can directly create a USDC/DAI exchange pool.
0x
0x is a peer-to-peer trading protocol, which mainly provides services for developers and provides protocol support for many DEXs. The 0x protocol adopts off-chain matching and on-chain settlement to balance the issues between asset security and user experience.
Tokenlon
in conclusion
in conclusion
As we move into the future, more and more blockchains are being used. Each thinks new cross-chain solutions will be used. But what users need is a way to use all of these tokens and trade or swap them whenever they want without too much friction.
The exploration of cross-chain decentralized exchanges is the best way to the future.
